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Eurozone productivity broadly stabilises in June
- Efficiency gains at service providers offset deterioration at manufacturers
- France posts further rise in output per head, while Germany sees another decline
- Productivity in Italy rebounds from May's contraction
Eurozone productivity broadly stabilised in June as expansion in the service sector partially offset deterioration at goods producers. On a national basis, data showed ongoing growth in France and a further decline in Germany, while Italy saw a rebound in output per head. The latter overtook France as the best-performing nation regarding efficiency gains.
Rising from 49.7 in May to 49.9, the seasonally adjusted Eurozone Productivity PMI® - derived from IHS Markit's national manufacturing and services PMI survey data - showed a broad stabilization of output per head in June. Goods producers registered efficiency losses for the fourth month running, while a marginal increase was seen in the service sector following stagnation in the prior survey period.
Contributing to the overall expansion in euro area productivity was a return to growth in Italy. Having fallen during May for the first time in 19 months, output per head increased slightly in June. The rise was centred on the service sector, where growth was the strongest since March. Workforce efficiency was broadly unchanged at goods producers, ending a one-and-a-half year sequence of expansion. Across the private sector as a whole, although slight, the upturn was quicker than in France.
Workforce efficiency in France's private sector improved for the twenty-third straight month at the end of the second quarter. That said, the pace of expansion was marginal, the weakest in this sequence and below its long-run average. The slowdown reflected a softer increase in productivity in the service economy (23-month low) as an uptick was recorded at goods producers (four-month high).
As has been the case since March, Germany registered efficiency losses during June. However, the deterioration was mild and the slowest in three months. The downturn in productivity in the manufacturing industry was the fourth in as many survey periods, with the rate of reduction little-changed from the modest pace noted midway through the quarter. At service providers, the current trend of worsening workforce efficiency was extended to three months, but the contraction was the slowest over this sequence and only marginal.
The latest set of Productivity PMI data showed weaker quarterly performances in a broad-based fashion. At the eurozone level, the average figure for Q2 was the lowest since the same period in 2013. In Germany, the deterioration over the current three months was the quickest since the final quarter of 2011. Despite seeing growth in Q2 as a whole, rates of expansion in France and Italy were the slowest in seven and six quarters respectively.
Pollyanna De Lima, Principal Economist, IHS Markit
Tel: +44 1491 461 075
Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
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The data flow coming from the US in the coming months will be key to guiding FOMC policy, see our chart below... https://t.co/7PtG9KOx9u